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NEW YORK — Revlon Inc. more than doubled its net income in the second quarter, but sales declined across all regions.
This story first appeared in the August 1, 2013 issue of WWD. Subscribe Today.
On Wednesday, the beauty firm reported that net income for the three months ended June 30 was $24.7 million, or 47 cents a diluted share, compared with $11.1 million, or 21 cents a share, in the year-ago quarter, boosted by an $18.1 million insurance gain related to the 2011 fire that destroyed its facility in Venezuela.
Net sales in the quarter declined 2 percent to $350.1 million, compared with $357.1 million. Excluding unfavorable foreign currency exchange, sales were essentially flat, hampered by lower sales in Venezuela and lower sales of Almay.
Alan Ennis, the firm’s president and chief executive officer, told WWD, “While our sales were essentially flat, the company did improve operating profits [excluding onetime items], as a result of our [cost] savings program.”
Almay color cosmetics continued to struggle despite recent launches, such as its relaunched lip line called Color + Care Liquid Lip Balm and Smart Shade CC Cream Complexion Corrector. Chris Elshaw, Revlon’s executive vice president and chief operating officer, referring to the brand “stable,” said Almay’s lower sales were driven by a shift in marketing in the U.S. from traditional advertising to retail promotions. Julia Goldin, Revlon’s global chief marketing officer, said the company is seeing “positive performances” from the June launches, but added, “It will take some time for them to be a meaningful part of the business.”
By region, net sales in the U.S. were flat at $203.9 million, with higher sales of SinfulColors and the addition of Pure Ice offset by lower sales of both Almay and Revlon. In Asia-Pacific, net sales declined 2.7 percent to $54.3 million due to lower sales of Revlon in China and certain distributor territories. In Europe, the Middle East and Africa, net sales decreased 3.8 percent to $42.7 million, and in Latin America and Canada, net sales were down 7.2 percent to $49.2 million, dragged down by business conditions in Venezuela, including the country’s currency restrictions. “We are not shipping product that can’t be paid for in dollars,” said Elshaw.
For the first half of the year, net income was $17.8 million, or 34 cents a diluted share, compared with $19.6 million, or 37 cents, in the year-ago period.
Net sales for the six months were $682 million, compared with $687.8 million in the prior-year period. Excluding foreign exchange, sales ticked up 1 percent.
Ennis also said Wednesday that Revlon has named Lawrence Alletto executive vice president, chief financial officer and chief administrative officer. Alletto, who is expected to begin his new role at Revlon by Oct. 31, hails from J.P. Morgan Chase & Co., where he served as managing director of the investment banking department since 1993, and as the global head of Financial Sponsors Group since 2009. He previously worked at Chemical Bank, following other positions in the finance sector.
Robert Kretzman, Revlon’s current executive vice president and chief administrative officer, plans to retire on Sept. 30, after 25 years at the company.
He has been elected to Revlon’s board, which will increase to 13 directors, effective Oct. 1.